Sagar Cement up 14%

Sagar Cement announced yesterday that National Company Law Tribunal (NCLT) has approved the resolution plan for acquisition of Andhra Cements on 16th February 2023.

This acquisition is aligned with its strategy of consolidating its presence in established markets and also meet its objective of reaching 10MnT capacity by 2025.

The acquisition cost of $56/tonne, including upgradation, is competitive.

The company proposes to spend Rs 762 crore for acquisition, Restart Capex of Rs.85 crore and an additional Rs. 75 crore as Working Capital and Other Costs.

It expects to start commercial operations by Q1FY24.

The company’s Board gas also approved an additional capital outlay of Rs. 468 crores for enhancement of the clinker capacity to 2.3 MTPA from existing 1.65 MTPA and cement capacity to 3 MTPA from 1.8 MTPA at DCW.

The company hopes that these enhances capacities will be commissioned during second half of FY 25. Operations at VCW may be discontinued due to the operational constraints.

Sagar Cements will have 95% stake in Andhra Cement and will continue to remain listed. As per regulatory requirements, Sagar Cement will reduce its holding to 90%, within 12 months and further to 75% within 36 months from the NCLT approval date.

The stock price has reacted positively to this news, rising over 14% to hit an intraday high at Rs.238.50 on the back of over 8.5x rise in volumes. Its 52-week high is at Rs.274.90.